Life sciences venture capital (VC) funding recorded a significant rebound in Q2 2024, according to CBRE, after being almost nonexistent for the past six months. The quarter’s total reached $65.9 million, 13.4% above the five-year quarterly average.
Denver/Boulder Life Sciences Figures Q2 2024
- Leasing activity rose to 78,800 sq. ft. in Q2 2024, its highest total since Q4 2022 and a 61.1% increase against the 49,000 sq. ft. leased last quarter.
- Q2 2024 net absorption totaled positive 6,600 sq. ft., closely on par with the previous quarter’s total of 6,900 sq. ft.
- Direct vacancy continued to edge slightly higher in Q2 2024, rising 60 basis points (bps) quarter-over-quarter to 10.2%, but was still down 140 bps year-over-year.
- The construction pipeline eased again this quarter after one new delivery and no new construction starts. BioMed Realty completed an additional 25,900 sq. ft. in Boulder, leaving 403,000 sq. ft. under construction as of end Q2 2024.
- The average asking rent for laboratory space in the Denver/Boulder metro has remained largely stable over the past year at approximately $60.00 per sq. ft. NNN.
Demand: Leasing Activity, Absorption & Vacancy
Leasing activity rose to 78,800 sq. ft. in Q2 2024, its highest total since Q4 2022 and a 61.1% increase against the 49,000 sq. ft. leased last quarter. The quarter’s largest transaction was Integrated DNA Technologies renewing for 42,100 sq. ft. and expanding by an additional 5,900 sq. ft. at 2425-2555 55th St in Boulder. New lease demand remains concentrated among users requiring roughly 15,000 sq. ft or less with spec suites being a popular option. Q2 2024 net absorption totaled positive 6,600 sq. ft., closely on par with the previous quarter’s total of 6,900 sq. ft. Direct vacancy continued to edge slightly higher in Q2 2024, owing to the steady delivery of more speculative conversion space. Direct vacancy rose 60 basis points (bps) to 10.2% but was down 140 bps year-over-year. With a robust construction
pipeline still in place, vacancy is expected to continue its slight upward trajectory in the second half of 2024. Life sciences venture capital (VC) funding recorded a significant rebound in Q2 2024 after being almost nonexistent for the past six months, a positive sign for the region’s startups and future life sciences demand. Q2 2024 VC funding reached $65.9 million, topping the quarterly average seen over the past five years by 13.4%. VC funding reached a record high of $287.6 million in 2023.
Development Activity
The construction pipeline eased again in the second quarter of 2024 after one new delivery and no new construction starts. The quarter’s sole completion was 5525 Central Ave in Boulder’s Flatiron Park, which delivered 25,900 sq. ft. of speculative conversion space. Four projects totaling nearly 403,000 sq. ft. were under construction at the end of Q2 2024, of which 10.2% was preleased. Three of the four projects under construction are in Boulder and account for nearly 95.0% of the total sq. ft. underway. BioMed Realty is very close to completing its new speculative building at 5505 Central Ave in Boulder, with more speculative space also set to be completed at Infinite Labs in Louisville in Q3 2024. The conversion of a portion of Medtronic’s former campus in Gunbarrel also remains underway. Notable projects that will keep the development pipeline active into 2025 include Koelbel & Co and Vitrian’s JV conversion of the former Lowe’s in Louisville and the massive Redtail Ridge mixed-use project in Louisville, a JV project led by Sterling Bay that is nearing final planning approval.
Submarket Statistics
The Denver/Boulder market surpassed 4.5 million sq. ft. of life sciences inventory, of which 71.3% is lab space and 28.7% is GMP space. 39.1% of the
market’s inventory is located in the Boulder submarket, with 27.0% of inventory situated in the Northwest submarket. All new construction underway is located within these two submarkets and is likely to remain so for the foreseeable future on behalf of several of the aforementioned projects. With new development heavily concentrated in these two submarkets over the past few years, they comprise 68.6% of the market’s direct vacancy at rates of 11.5% and 9.3%, respectively. The Northeast submarket had the highest vacancy at 34.4% which is attributed to its smaller inventory primarily comprised of newer construction at the Fitzsimons campus. Direct vacancy rose by 140 bps in Boulder and was largely unchanged elsewhere. Asking rents were also largely stable in Q2 2024 across the submarkets.
